Exhibit 99.1
FOR IMMEDIATE RELEASE
INTRICON REPORTS 2010 FIRST-QUARTER RESULTS
Revenues Grow 23 Percent from Prior-Year Period; Company Returns to Profitability
ARDEN HILLS, Minn. — May 11, 2010 — IntriCon Corporation (NASDAQ: IIN), a designer, developer, manufacturer and distributor of body-worn medical devices, today announced financial results for its 2010 first quarter ended March 31, 2010.
For the first quarter, the company reported net sales of $14.6 million, an increase of 23 percent from net sales of $11.8 million for the prior-year period. 2010 first-quarter net income was $18,000, or $0.00 per diluted share, versus a net loss of $989,000, or $0.19 per diluted share, for the prior-year period.
IntriCon reported 2010 first-quarter income from continuing operations—which consists of the company’s core body-worn device business (medical, hearing health and professional audio communications)—of $178,000, or $0.03 per diluted share. First-quarter results from discontinued operations include a net loss of $160,000, or $0.03 per diluted share.
In December 2009, IntriCon approved and later announced plans to divest its non-core electronics business, Anaheim, Calif.-based RTI Electronics, Inc. As a result, RTI Electronics’ results are now classified as discontinued operations. The divestiture is expected to be completed by mid-2010.
“In what is typically a weak quarter due to seasonality, IntriCon not only delivered significant year-over-year growth, we also grew revenue sequentially from the 2009 fourth quarter,” said Mark S. Gorder, president and chief executive officer of IntriCon. “With 20-plus percent increases over the prior-year first quarter coming from all three of our core businesses, this is a positive start to 2010. Economic uncertainty remains, but we’re cautiously optimistic as we see customers beginning to re-engage.
“For the third straight quarter, our medical business delivered record revenues, growing 23 percent from the prior-year period. Driving medical gains were continued sales of wireless glucose monitors and the addition of sales from our proprietary cardiac monitoring devices. Hearing health revenues rose 22 percent from the first quarter of last year and professional audio communications grew 25 percent. These increases were due primarily to higher demand from our existing customers.”
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IntriCon Corporation 2010 First-Quarter Results
May 11, 2010
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Gorder indicated the company is encouraged by the rebound in both hearing health and professional audio communications. IntriCon expects these businesses to continue to post modest organic growth as the economic environment slowly improves. In addition, the company recently launched various new products, including the Scenic™ and Overtus™ DSP amplifiers—these are anticipated to have a positive impact in late 2010.
Gross profits in the 2010 first quarter were 25.3 percent, compared to 18.4 percent in the prior-year period. The primary drivers of the increase were higher sales volumes and the impact of various gross profit improvement initiatives. IntriCon continues to implement gross profit improvement initiatives, including production transfers to lower-cost manufacturing facilities and the rollout of lean manufacturing programs.
Business Update
In hearing health, IntriCon recently unveiled its new Scenic DSP amplifier and Overtus DSP amplifier at AudiologyNOW!, the annual convention of the American Academy of Audiology held in San Diego. The Scenic DSP amplifier is a high-performance hearing aid amplifier with advanced acoustic analysis capabilities, including impulsive noise suppression and wind noise suppression, steady-state noise reduction and improved adaptive feedback cancellation. The Overtus DSP amplifier is designed to optimize open in-the-canal (ITC) type fittings. The ampl ifier algorithm contains two patented features—an advanced adaptive feedback canceller optimized for open ITC fittings and an acoustic switch eliminating the need for a mechanical switch and allowing for further miniaturization.
According to Gorder, “AudiologyNOW! gave hearing aid manufacturers an opportunity to experience firsthand how the latest in DSP technology can help people suffering from hearing loss. Scenic is the direct result of IntriCon’s sustained focus on research and development, and offers end users superior hearing clarity.”
Gorder said that the company also premiered its new physioLink™ technology at AudiologyNOW!. PhysioLink™ consists of a 2.4GHz radio, communications protocol processing and miniature antenna, packaged into a compact module suitable for ear-worn and body-worn applications of audio and data streaming over distances of up to five meters. “We demonstrated this technology for the first time at the convention. Our intended uses for physioLink include heari ng aids, professional audio products, situational listening devices, cardiac diagnostic monitors and other biotelemetry devices—this technology really spans all of our core businesses.”
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IntriCon Corporation 2010 First-Quarter Results
May 11, 2010
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Situational listening devices, also known as SLDs, are intended to aid hearing-impaired people in noisy environments and, among other things, help them listen to television and music by direct wireless connection. These devices are designed to supplement conventional hearing aids that don’t handle noisy situations well. IntriCon expects to launch a line of SLDs, including a companion microphone and television adaptor, in late 2010.
On the medical front, the company continues to make progress with its new Cardiac Diagnostic Monitoring (CDM) device. A prototype model was formerly called the Mobile Patient ECG Telemetry System, or MPETS. However, IntriCon has renamed the system Centauri. Centauri is a next-generation wireless outpatient monitoring device that uses a proven automatic arrhythmia detection algorithm.
According to Gorder, a primary focus remains bringing Centauri to market. IntriCon is beginning to work with the FDA to secure necessary approvals for the device and anticipates it will be available for sale in late 2010.
Concluded Gorder, “We are pleased with first-quarter performance, but realize that we have more work in front of us.More than ever, we are focusing our resources and capital on our core strengths, while continuing to prudently invest in new initiatives that we believe will fuel long-term growth. This strategy centers on the idea of enhancing the mobility and effectiveness of miniature, body-worn devices—and creating entirely new technology-driven products.”
Conference Call Today
As previously announced, the company will hold an investment community conference call today, Tuesday, May 11, 2010, beginning at 4:00 p.m. CT. Mark Gorder, president and chief executive officer, and Scott Longval, chief financial officer, will review first-quarter performance and discuss the company’s strategies. To join the conference call, dial: 1-877-941-2928 (international 1-480-629-9725) and provide the conference identification number 4291984 to the operator.
A replay of the conference call will be available one hour after the call ends through 11:59 p.m. CT on Tuesday, May 18, 2010. To access the replay, dial 1-800-406-7325 (international 1-303-590-3030) and enter access code: 4291984.
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IntriCon Corporation 2010 First-Quarter Results
May 11, 2010
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About IntriCon Corporation
Headquartered in Arden Hills, Minn., IntriCon Corporation designs, develops and manufactures miniature and micro-miniature body-worn medical products. The company is focused on three key markets: medical, hearing health, and professional audio and communications. IntriCon has facilities in the United States, Asia and Europe. The company’s common stock trades under the symbol “IIN” on the NASDAQ Global Market. For more information about IntriCon, visitwww.intricon.com.
Forward-Looking Statements
Statements made in this release and in IntriCon’s other public filings and releases that are not historical facts or that include forward-looking terminology such as “may”, “will”, “believe”, “expect”, “should”, “optimistic” or “continue” or the negative thereof or other variations thereon are “forward-looking statements” within the meaning of the Securities Exchange Act of 1934, as amended. These forward-looking statements include, without limitation, statements concerning prospects in the miniature body-worn device arena, new products, planned disposition of RTI Electronics and expected charges, strategic alliances, future growth and expansion, market fundamentals, future financial condition and performance, prospects and the positioning of IntriCon to compete in chosen markets and the Company’s planned investmen ts in research and development. These forward-looking statements may be affected by known and unknown risks, uncertainties and other factors that are beyond IntriCon’s control, and may cause IntriCon’s actual results, performance or achievements to differ materially from the results, performance and achievements expressed or implied in the forward-looking statements. These risks, uncertainties and factors include, without limitation, risks related to the current economic crisis, the risk that IntriCon may not be able to achieve its long-term strategy, weakening demand for products of the company due to general economic conditions, risks related to the company’s strategic alliances and joint venture, possible non-performance of developing the Centauri product and other technological products, the volume and timing of orders received by the company, changes in the mix of products sold, competitive pricing pressures, the cost and availability of electronic components and commodities for the compa ny’s products, ability to create and market products in a timely manner, competition by competitors with more resources than the company, foreign currency risks arising from the company’s foreign operations, ability to satisfy and maintain compliance with the covenants under the company’s loan facility, the costs and risks associated with research and development investments and other risks detailed from time to time in the company’s filings with the Securities and Exchange Commission, including the Annual Report on Form 10-K for the year ended December 31, 2009. The company disclaims any intent or obligation to publicly update or revise any forward-looking statements, regardless of whether new information becomes available, future developments occur or otherwise.
Contacts
At IntriCon:
Scott Longval, CFO
651-604-9526
slongval@intricon.com | At Padilla Speer Beardsley:
Matt Sullivan/Marian Briggs
612-455-1700
msullivan@psbpr.com /mbriggs@psbpr.com |
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IntriCon Corporation 2010 First-Quarter Results
May 11, 2010
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IntriCon Corporation
Consolidated Condensed Statements of Operations
(Unaudited)
| | Three Months Ended | |
| | March 31,
2010 | | March 31,
2009 | |
| | | | | | | |
Sales, net | | $ | 14,553,464 | | $ | 11,843,962 | |
Cost of sales | | | 10,877,590 | | | 9,667,777 | |
Gross profit | | | 3,675,874 | | | 2,176,185 | |
| | | | | | | |
Operating expenses: | | | | | | | |
Selling expense | | | 786,824 | | | 619,035 | |
General and administrative expense (a) | | | 1,443,956 | | | 1,378,217 | |
Research and development expense | | | 1,119,093 | | | 880,530 | |
Total operating expenses | | | 3,349,873 | | | 2,877,782 | |
Operating income (loss) | | | 326,001 | | | (701,597 | ) |
| | | | | | | |
Interest expense | | | (169,718) | | | (124,914 | ) |
Equity in loss of partnerships | | | (11,900 | ) | | (86,948 | ) |
Other income, net | | | 44,582 | | | 56,755 | |
Income (loss) from continuing operations before
income taxes and discontinued operations | | | 188,965 | | | (856,704 | ) |
Income tax expense (benefit) | | | 10,691 | | | (49,528 | ) |
| | | | | | | |
Income (loss) before discontinued operations | | | 178,274 | | | (807,176 | ) |
Loss from discontinued operations, net of income taxes | | | (159,978 | ) | | (182,114 | ) |
Net income (loss) | | $ | 18,296 | | $ | (989,290 | ) |
| | | | | | | |
Basic and diluted income (loss) per share: | | | | | | | |
Continuing operations | | $ | 0.03 | | $ | (0.15 | ) |
Discontinued operations | | $ | (0.03 | ) | $ | (0.04 | ) |
Net income (loss) | | $ | 0.00 | | $ | (0.19 | ) |
Average shares outstanding: | | | | | | | |
Basic and diluted | | | 5,470,858 | | | 5,343,033 | |
(a) General and administrative expense includes $119,000 and $137,000 of non-cash stock option expense for the three months ended March 31, 2010 and 2009, respectively.
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IntriCon Corporation 2010 First-Quarter Results
May 11, 2010
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IntriCon Corporation
Consolidated Condensed Balance Sheets
Assets | | March 31,
2010
(Unaudited) | | December 31,
2009 | |
| | | | | | | |
Current assets: | | | | | | | |
| | | | | | | |
Cash | | $ | 491,486 | | $ | 385,055 | |
| | | | | | | |
Restricted cash | | | 321,745 | | | 405,745 | |
| | | | | | | |
Accounts receivable, less allowance for doubtful
accounts of $226,000 at March 31, 2010 and December 31, 2009 | | | 7,570,179 | | | 7,083,694 | |
| | | | | | | |
Inventories | | | 8,297,085 | | | 8,220,996 | |
| | | | | | | |
Refundable income tax | | | — | | | 63,676 | |
| | | | | | | |
Other current assets | | | 598,101 | | | 815,742 | |
| | | | | | | |
Current assets of discontinued operations | | | 1,242,312 | | | 1,139,813 | |
| | | | | | | |
Total current assets | | | 18,520,908 | | | 18,114,721 | |
| | | | | | | |
Machinery and equipment | | | 35,933,986 | | | 35,516,164 | |
Less: Accumulated depreciation | | | 29,205,782 | | | 28,725,359 | |
Net machinery and equipment | | | 6,728,204 | | | 6,790,805 | |
| | | | | | | |
Goodwill | | | 9,708,979 | | | 9,716,841 | |
| | | | | | | |
Investment in partnerships | | | 1,225,278 | | | 1,237,178 | |
| | | | | | | |
Other assets of discontinued operations | | | 124,245 | | | 141,877 | |
| | | | | | | |
Other assets, net | | | 1,438,348 | | | 1,361,355 | |
| | | | | | | |
Total assets | | $ | 37,745,962 | | $ | 37,362,777 | |
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IntriCon Corporation 2010 First-Quarter Results
May 11, 2010
Page 7
IntriCon Corporation
Consolidated Condensed Balance Sheets
Liabilities and Shareholders’ Equity | | March 31,
2010
(Unaudited) | | December 31,
2009 | |
Current liabilities: | | | | | | | |
Checks written in excess of cash | | $ | 249,461 | | $ | 101,416 | |
Current maturities of long-term debt | | | 1,714,802 | | | 1,708,839 | |
Accounts payable | | | 3,878,749 | | | 3,637,329 | |
Income taxes payable | | | 19,628 | | | -- | |
Deferred gain | | | 110,084 | | | 110,084 | |
Partnership payable | | | 260,000 | | | 260,000 | |
Liabilities of discontinued operations | | | 1,034,169 | | | 926,409 | |
Other accrued liabilities | | | 3,291,447 | | | 2,866,584 | |
| | | | | | | |
Total current liabilities | | | 10,558,340 | | | 9,610,661 | |
| | | | | | | |
Long term debt, less current maturities | | | 7,109,030 | | | 7,729,797 | |
Other postretirement benefit obligations | | | 738,465 | | | 756,000 | |
Long term partnership payable | | | 500,000 | | | 500,000 | |
Deferred income taxes | | | 122,753 | | | 128,753 | |
Accrued pension liabilities | | | 503,893 | | | 543,194 | |
Deferred gain | | 577,942 | | | 605,463 | |
| | | | | | | |
Total liabilities | | | 20,110,423 | | | 19,873,868 | |
| | | | | | | |
Shareholders’ equity: | | | | | | | |
| | | | | | | |
Common shares, $1.00 par value per share; 20,000,000 shares authorized; 5,990,412 and 5,985,862 shares issued; 5,474,658 and 5,470,108 shares outstanding at March 31, 2010 and December 31, 2009, respectively. | | | 5,990,412 | | | 5,985,862 | |
Additional paid-in capital | | | 15,118,128 | | | 14,986,840 | |
Retained deficit | | | (1,986,891) | | | (2,005,187) | |
Accumulated other comprehensive loss | | | (221,032) | | | (213,528) | |
Less: 515,754 common shares held in treasury, at cost | | | (1,265,078) | | | (1,265,078) | |
| | | | | | | |
Total shareholders’ equity | | | 17,635,539 | | | 17,488,909 | |
| | | | | | | |
Total liabilities and shareholders’ equity | | $ | 37,745,962 | | $ | 37,362,777 | |
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